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There are so many steps to take when selling your home, but pricing your home for sale can be a major influencer in the rest of the process. Determining the price of your home for sale can either bring in or drive away buyers, it can impact how long your home is on the market, and it definitely affects how much you get out of the sale. You don’t want to list your Seattle, WA home for sale at $500,000 when the average price for the area sits above $1M or have your home sit on the market because you did the opposite.
How do you ensure that your home for sale is priced correctly? Keep reading below to discover how to price a home for sale and what market trends to look out for.
Scope The Competition
The first step to accurately pricing your home for sale is to do your market research. Check out whether or not the market is going to change soon, if home prices are stable, and if this is the best time to sell in the first place. This is much easier when you are selling with an agent, as they can simply do the research on your behalf. A top real estate agent will often do what they call a “Market Analysis” to give you not just what is selling, but homes most like yours is selling. It doesn’t do you any good to know what sold in Seattle if you live in a suburb of Bellingham. If you’re going to do this yourself you need to be ready to do some homework.
Search on every site you can find and figure out what comparable homes are listing and selling for in the current market. Note that the listing price and selling price are two different research points. Consider this:
After research, you discover that comparable homes in your area would put your home at a listing value of $500K. However, you see that the sale price is landing around $50,000 above the asking price, so you consider just listing your house at $550K in the first place.
If you take this route, you’re losing a lot of potential buyers when setting your initial price like that. Psychologically, home buyers won’t look for home prices at their max budget within their initial search. They want to leave room to negotiate, especially in a post-Covid market. To have as much homebuyer interest as possible, use a comparable listing price to other homes in your area and prepare for negotiations as they come.
Make Sure You’re Studying Fair Comps
With that said, ensure that your research is within your immediate area. This is relatively easy if you search inside your own neighborhood. Be aware of county lines, school districts, and major streets that could impact inventory prices. In addition, only include homes in your search that closely compare your home’s size, style, and features . If a 4-bedroom house with a 2-car garage is selling for $350K, your 2-bedroom cottage may not list at that price, even if it’s within the same neighborhood. Your agent, if you have one, will help your search stay within appropriate borders, but if you’re selling on your own you may have to be a little more mindful of the homes you’re studying.
Price it like an appraiser
Appraisers follow strict guidelines on pricing a home. While you won’t have access to their same tools you can get a rough guestimate by following these steps.
- Look for 3-5 SOLD homes in your legally defined neighborhood. If you can’t find any in your neighborhood, extend out by the quarter mile, but never over 1 mile unless you live in a rural area. Be sure to pick homes that closely match yours in style and size. A 3 bedroom ranch won’t compare well to a 5 bedroom two story even in the same neighborhood.
- Make adjustments up on the homes that LACK your features and DOWN on the homes that have more features than you do. You can google rough estimates of value for features. Bedrooms, Bathroom, Finished basements, porches, etc. There’s even a yearly report put out if you want to get specific.
- Average it up and you’ll be really close.
Don’t Over/Underprice
Avoid the mistake of overpricing your home. One of TOP reasons why a house isn’t selling is due to the price of the property being too high. As mentioned above, pricing your home above what is normal for your area and property can keep buyers from even considering your home. Even if you have plenty of time to sell, the longer your home is on the market, the fewer home buyers will want to give it a chance.
On the other hand, though, don’t undervalue your home either. It’s okay if you need to sell your home quickly or want to initiate a bidding war on your home, but it can leave a lot of money on the table. Overall, to avoid over- or underpricing your home, the best option is to consult a local real estate agent to help you out in the process.
Know How Much Upgrades are ACTUALLY Worth
One of the biggest ways that home sellers inaccurately price their homes is by overestimating how much their home renovations add to the listing and sale price of the home. While replacing appliances or adding a back deck will add significant value to your home, it’s not likely that you’ll be able to get back the full amount you put in. Determining how much value a certain upgrade adds to your home requires further research, so if you have done any renovations to your home, consider that when doing your initial price research.
For reference, here are the most valuable home upgrades:
- Updated Garage
- Upgraded Veneer Siding
- Wooden Deck Addition
- Finish the Basement
There isn’t an upgrade that actually provides an ROI in most markets. In other words, no matter what you do to your home (aside from substantial renovations) you won’t be able to recoup the entire cost. The caveat to this is based on location and demand. Adding an additional bedroom or bathroom might open up a new price bracket for you. Even then, homeowner are notorious for thinking that because they painted a room or added a screened-in-porch that their home value will go up the value (or more) that they spent. In most cases it won’t.
Don’t Let Emotions Get In The Way
Lastly, it’s important to remember that there will always be sentimental value attached to the home you’re selling. Don’t let that sentiment get in the way of realistically and logically pricing your home. This is where a third-party real estate professional can come in handy. To keep the feelings at bay, make sure you have someone to hold you accountable throughout the selling process.
How To Price a Home For Sale
Remember these tips when pricing your home for sale in Philadelphia, PA, Sacramento, CA or anywhere else in the U.S. and you will be on your way to getting the most out of your transaction. Selling a home can be nerve-wracking, especially if you have lived in that home for most of your life. Bring yourself some peace in the journey by making sure you are listing the home in a realistic range and accepting an offer that matches or exceeds the current market.
